Maberly Phillips.

A history of banks, bankers, & banking in Northumberland, Durham, and North Yorkshire, illustrating the commercial development of the north of England, from 1755 to 1894, with numerous portraits, facsimiles of notes, signatures, documents, &c online

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Online LibraryMaberly PhillipsA history of banks, bankers, & banking in Northumberland, Durham, and North Yorkshire, illustrating the commercial development of the north of England, from 1755 to 1894, with numerous portraits, facsimiles of notes, signatures, documents, &c → online text (page 8 of 57)
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that proper persons should be authorised to call for the sums subscribed, or any part of them, if ever
they should be necessary to aid the funds of the Banks, which we confess, to us appears hardly possible.
We have explained this branch of our plan, by preparing a subscription paper, signing it, and by
adding, opposite to our names, the simis we are ready to advance if called upon. It is intended that
this subscription shall be kept open until it amounts to £230,000 at least, the value of the notes in
circulation ; and that the gentlemen, to whom this authority is committed, shall be of the highest
respectability ; and to them shall be given by the Bankers that pledge of their private fortunes, which
they so honorably propose.

We wish to recommend to these gentlemen not to resume their business till some day in the
ensuing week, by which time it is evident to us, that they will be fully enabled to answer every possible
demand, and in the mean time to issue such cash as may be necessary to answer the demands of all
who are employed in the Coal-works and Manufactories.

The Proprietors of the Commercial Bank having stated to the public meeting yesterday, that it
was not their intention to continue Bankers ; and having given the strongest assurances of their ability
to answer every demand upon them, we did not think it necessary to examine particularly the state
of their debts and credits ; but we wish to recommend it strongly to the other Bankers, that as soon as
possible, every proper aid be given to that house, to enable them to liquidate their affairs with the
utmost dispatch.

We cannot conclude this report without expressing ourselves highly satisfied with the conduct of
the Gentlemen of the four Banks who gave us a meeting, and who with that openness and liberality
becoming men conscious of their integrity, afforded us the fullest information concerning their circum-
stances and treuisactions.

JAMES RUDMAN, Chaibman. WALTER HALL. NATH. CLAYTON.

THO. CHA. BIGGE. T. E. HEADLAM. RALPH HERON.

HENRY U. REAY. WM. DARNELL. MALIN SORSBIE.

JOHN GRAHAM CLARKE. ST. PEMBERTON. ANTH. HOOD.

A. ADAMS. SAM. LAWTON. JOHN E. BLACKETT.

IN Consequence of this, the following Guarantee was immediately entered into by the Gentlemen
whose Names are subscribed, with the Simas respectively opposite to them.



10th APRIL, 1793.
We, the undersigned, do hereby promise to pay to James Rudman, Esq., Mayor of Newcastle-upon-
Tyne ; Henry CoUingwood, Esq., High Sheriff of the County of Northumberland ; and Sir Hedworth
Williamson, Baronet, High Sheriff of the County of Durham, or their Order, on their Demand, the
several sums set opposite to our respective Names, for the purpose expressed in the Report of the
Committee, appointed to deliberate upon the best means of restoring the public credit at this juncture,
by a General Meeting of the Gentlemen, Merchants, Tradesmen, and Inhabitants of Newcastle-upon-
Tyne, and its Neighbourhood, held the ninth Instant, and which Report bears date this day.



lS2j

It bears 148 signatures. The sums named vary from ^20,000 to :^5oo.
;^6o,5oo was subscribed from North Shields, which, added to the Newcastle list,
made a total of ;^320,200. A foot-note says : — " The engagement remains at the
office of the Town Clerk for the subscriptions of friends to the measure." South
Shields was also loyal to the banks, and sent a subscription list, headed,

" We, the under-signed, do fully approve of the measures adopted and entered into at Newcastle-
upon-Tyne in support of the banks of Messrs. Eidley, Cookson, & Co. ; Surtees, Burdon, & Co. ;
Baker, Hedley, & Co. ; and Lambton & Co., and for that purpose we subscribe the several sums opposite
our respective names. South Shields, April 11th, 1793."

S. Temple, jun., R. Bulmer & Co., and Wm. Wallis are each down for
;^3,ooo. The total amount raised at South Shields was ^30,500. Thirty names
are attached.

Another important gathering was held on April the loth, at Newcastle-upon-
Tyne : —

" At a meeting held this day of the wholesale tradesmen of this town and Gateshead, the
following declaration was unanimously agreed to : — We whose names are hereunto subscribed, being
fully assured that the funds of all the banks in Newcastle are more than adequate to pay every demand
upon them, think it necessary to inform our customers in all parts of the country that we continue to
take the notes of the undermentioned banks in payment, viz. — Sir M. W. Eidley & Co. ; Surtees,
Burdon, & Co. ; Baker, Hedley, & Co. ; Lambton & Co. The proprietors of the Commercial Bank
having determined not to re-commence the banking business, their notes cannot at present be taken ;
but we have the strongest assurance that as soon as the affairs of that bank can be wound up, the
notes will be paid in full. — Anthony Easteeby, Chairman."

The document bears 74 signatures.

The excitement of the times was not confined to Newcastle. At Sunderland,
on April loth, a large meeting was held "at the house of Mrs. Reay, it was
unanimously agreed to take in payment, as usual, the bank notes of Messrs.
Russell, Allan, and Wade ; and we do hereby agree to indemnify the public for the
amount of any Sunderland bank notes they may hold." One hundred and eighteen
signatures are recorded. From these accounts it would appear that Sunderland had
only one bank at this time, and that North and South Shields were dependent
upon Newcastle for their banking accommodation.

At Durham the excitement was evidently great. A meeting was held on the
loth of April, when steps were taken to sustain the credit of the Durham Bank,
(Messrs. Mills, Hopper, Pearson, and Chipchase.) A Committee of seventeen
Gentlemen was appointed and various resolutions passed. The Committee met on
the following day and appointed from their number a Select Committee to examine
the statement of the funds and affairs of the bank. At a meeting held in the Town
Hall on April nth, the Select Committee handed in a most favourable report.



• [53}

Seven names are attached to the document, one of the signatures being that /of
Wilham Hoar, who for some time was a silent partner in Messrs. Lambton's Bank.

Another announcement says : —

" At a meeting of the Noblemen and Gentlemen of the Counties of Northumberland and Durham,
held at the St. Alban's Tavern in St. Alban's Street (London) on Monday, the 15th day of April, 1793,
to consider of the means of supporting the Banks of Newcastle-upon-Tyne. Present — Henry
CoUingwood Esq., the High SherifE of Northimiberland, in the Chair; Duke of Portland, Earl of
Carlisle, Earl of Jersey, Earl of Scarborough, Earl of Tankerville, Earl of Strathmore, Lord Delaval,
Sir Wm. Middleton, Sir John Eden, Sir T. RiddeU, Six Wm. Scott, Solicitor General ; Mr. Sergeant
Clayton (who was previously a partner in Messrs. Masters & Co., Bankers, London, and often referred
to in the formation of Messrs. Davison-Bland & Co.), and twenty-eight County Gentlemen."

•' The following Resolutions were moved by Lord Delaval, seconded by Sir Wm. Middleton, and
unanimously adopted. ' Intelligence having been received since the High Sheriff of Northumberland
summoned this Meeting, that vigorous measures have been taken in Newcastle for supporting the
Credit of the four Banks of Ridley & Co., Surtees, Burdon, & Co., Baker & Co., and Lambton & Co.,
and there being strong Grounds for hoping that such Measures will have the desired Effect, Resolved —
That this Meeting return their thanks to the Mayor of Newcastle, and the Gentlemen, Merchants, and
others who have exerted themselves with so much public spirit, and will, on their Parts, use their best
Endeavours to give Effect to the Measures adopted at Newcastle, and particularly will direct their
respective Agents to assist the Credit of the four Banks, by receiving their Notes in Payment as
usual.' " A Committee was appointed consisting of Lord Delaval, Sir Wm. Middleton, Messrs. H.
Lambton, Charles Brandling, and Nicholas Ridley, to confer with and assist the Newcastle Committee.

Though rather late in the day, even Wooler held a meeting on April 1 8th, Sir
Francis Blake, Bart., in the chair. A resolution was passed pledging those who
signed the declaration to take the notes of the four Newcastle banks, also of
Messrs. Surtees, Burdon, Embleton, & Co., Berwick-upon-Tweed, and Messrs. Mills,
Hopper, & Co., of Durham. The signatures of sixty-nine gentlemen are given.

The various meetings and resolutions had the effect of restoring confidence,
the banks in the meantime having secured a fair amount of coin. On April i8th
the Newcastle firms announce that " having by the Direction of the Committee,
deferred the Re-commencement of their Payments till Saturday the 20th inst.,
they respectfully inform the Public that Business will be transacted as usual at their
respective Banks on that Day." True to their promise, the banks duly opened on
the Saturday, and business was resumed as usual. It may now be somewhat
amusing to contemplate the stoppage of all the banks in an important town from
Monday, the 8th of April, until Saturday, the 20th, yet such was the state of
things just a century back.*

* Referring to matters about the end of the last century a correspondent says:— "The coach charge (for
carrying specie) was Id. for 20/-, but there is some question of Insurance also. The waggon seems to be 7/6 per
jEIOO. Insurance from Calcutta to London j£26 5s. per XlOO, the same to Copenhagen. I have a Bill from
Calcutta 365 days after sight, the ship would be 5 or 6 months on the voyage, so this would be a slow process
for sending money." The cost of the carriage of silver from London to Dundee was about £2 5s. per cent.



[J^ '__

Although the banks had resumed their payments, the committee advertised
from week to week the particulars of the further support that they received. On
April 27th, they stated that the sum guaranteed was Four hundred and ninety-
eight thousand six hundred pounds.

In the "Theory and Practice of Banking," Mr. H. D. Macleod in writing
upon the panic of 1793, adopts the statements made by Lawson in his " History of
Banking," p. 268, regarding the Newcastle bankers, and further states that the
panic began in Newcastle. This I think can be shown to be incorrect. Mr.
Macleod says :—

" The declaration of war, though it must evidently have been foreseen, gave a shock to credit, which
was already staggering. On the 15th February, a house of considerable magnitude, deep in corn
speculations, failed, and on the 19th, the Bank refused the paper of Lane, Son, and Fraser, who stopped
next morning to the amount of nearly one million, involving a great number of other respectable houses.
In the meantime, the panic spread to the bankers. It began in Newcastle. The partners in the banks
at Newcastle were opulent, but their private fortunes were locked up. They issued notes which allowed
interest to commence at some months after date, and then they were payable on demand ; when the
run came they were unable to realise, and stopped payment."

A perusal of the present chapter, and a reference to the letters quoted in the
account of Messrs. Lambton's bank will show most clearly that the panic did not
begin at Newcastle, and that for six weeks after the failure of Lane, Son, and
Fraser on February 19th, the Newcastle Banks were conducting their business
as usual.

On March 9th, Lambton & Co. ordered the purchase of ;^ 10,000 Consols, as
they had " a considerable balance " in the hands of their London agents, and one
of the partners remarking upon the satisfactory state of the bank says : — " We
have also steered clear of any losses by the late Failures amongst the West India
Houses in London."

The letter from the firm to Mr. Lambton on March 20th, in which the writer
says that "we remain quiet and undisturbed here" of course refers to all the banks
in the locality, as he afterwards proceeds to show the exceptionally sound position
of their own establishment. It was not till the end of the month that any urgent
need of gold was felt, and all the banks kept open until April 8th, fully six weeks
after London was first affected. Mr. Macleod also repeats Lawson's statement
that the Newcastle banks "issued notes which allowed interest to commence
some months after date." I have not met with any confirmation of this statement.
Some of the Durham and North Yorkshire bankers had an optional clause, as will
be seen on the ^5 5s. Note of Messrs. Backhouse & Co., dated 1779, where they
undertake to pay upon demand at Darlington, or twenty-one days after sight at
Messrs. Smith, Wright, & Gray's, London ; but I do not know of any Northumbrian



^ [^5j

note that gave such an option. It happened in several cases that after a bank had
suspended, the notes were subsequently paid with interest from a given date.
These are the only interest notes that I have met with.

There can be no doubt that nearly all the local banks were sound, and the
difficulty of obtaining specie was the only cause of their stoppage. Their
geographical position enhanced this difficulty. When panic arose, there was only
a given quantity of gold in the country ; — "first come first serv^ed " was the order of
the day, so that naturally the banks farthest from the depot of bullion were likely
to come off the worst. On the other hand, Mr. Walter Bagehot in his able work,
"Lombard Street," points out that

"ultimate payment is nob what the creditors of a bank want; they want present, not postponed,
payment, they want to be repaid according to agreement ; the contract was that they should be paid
on demand, and if they are not paid on demand they may be ruined."

The publicity given to the bankers' accounts during the panic of 1793 enables
us to get some slight knowledge of the note issue of that period, and although the
statement is very incomplete, I deem it worthy of record, as deductions may be
drawn from it that will probably be of future use. I am especially led to do this
from some observ^ations made by Mr. Bagehot. He describes the manner in which
banks of issue grew to be banks of deposit, and remarks that complete accounts of
the country banks of the last century are wanting. After enumerating the various
functions of the early banks, he says : — " These are all uses other than those of
deposit banking which banks supplied that afterwards became in our English sense
deposit banks. By supplying these uses, they gained the credit that afterwards
enabled them to gain a living as deposit banks. Being trusted for one purpose,
they came to be trusted for a purpose quite different, ultimately far more important,
though at first less keenly pressing. But these wants only affect a few persons,
and therefore bring the bank under the notice of a few only. The real introductory
function which deposit banks at first perform is much more popular, and it is only
when they can perform this more popular kind of business that deposit banking
ever spreads quickly and extensively. This function is the supply of the paper
circulation to the country, and it will be observed that I am not about to overstep
my limits and discuss this as a question of currency. In what form the best
paper currency can be supplied to a country is a question of economical
theory with which I do not meddle here. I am only narrating unquestionable
history, not dealing with an argument where every step is disputed. And
part of this certain history is that the best way to diffuse banking in a community
is to allow the banker to issue bank notes of small amount that can supersede the
metallic currency. This amoimts to a subsidy to each banker to enable him to



[56]



keep open a bank till depositors choose to come to it. The country where deposit
banking is most diffused is Scotland, and there the original profits were entirely
derived from the circulation. The note issue is now a most trifling part of the
liabilities of the Scotch banks, but it was once their mainstay and source of profit.
A curious book, lately published, has enabled us to follow the course of this in
detail. The Bank of Dundee, now amalgamated with the Royal Bank of Scotland,
was founded in 1763, and had become before its amalgamation, eight or nine years
since, a bank of considerable deposits. But for twenty-five years from its
foundation it had no deposits at all. It subsisted mostly on its note issue, and a
little on its remittance business. Only in 1792, after nearly thirty years, it began
to gain deposits, but from that time they augmented very rapidly. The banking
history of England has been the same, though we have no country bank accounts
in detail which go back so far."

The statement of the Bank of Dundee was the following : —

Statement op Cibculation and Deposits op the Bank op Dundee at

Inteevals op Ten Yeaes between 1764 and 1864.
Year. Circulation. Deposits.

1764 .. .. .. 30,395



1774






27,670









1784






56,342









1794






50,254






48,809*


1804






54,096






157,821


1814






46,627






445,066


1824






29,675






343,948


1834






26,467






563,202


1844






27,504






535,253


1854






40,774






705,222


1864






41,118






684,898


I summarise below a statement of the note issue.


deposi


ts, and capital of the


[orthern banks, as far as can be ascertained : —






Year. Note Issue.


Depos


its. Capital.


£


£


£


Old Bank (Newcastle).. 1756 .. 13,500


10,00


. . 2,000


1771 .. 82,000








1773 .. 102,000








1774 .. 170,000





8,000


1776 .. 180,000


85,00


. . 8,000


1777 .. 128,000t ..


87,00


. . 8,000


Davison-Bland & Co, ] 1788 .. —





. . 14,000


(Newc


astle.)


f


1793 . . 60,0(


X)









* The Bank did not begin to receive deposits till 1792, in which year they amounted to ^635,944.
t The great falling off is presumed to be from the number of new banks which started about this time.



[57]



Year.



\ Aug. 1789
Bell, Woodall, & Co., ^ ,^„^



(Scarborough) Opened "
May 1st, 1788.

Mills, Hopper, & Co.)
(Durham.) I

Total circulation of four)



Newcastle Banks.



1790
1801
1814

1793
1793



rote Issue.


Deposits.


Capital.


£


£


£


20,300





2.000


22,000





much increased


35,400








60,000









31,420



230,000



In 1793 the following banks were existing in the district : —

London Agents.
Scarborough .. Bell, Woodall, & Co.

Malton, Whitby, and Scarborough Bank (Hayes, Lea-
tham, Hodgson, Walker, and Lister)



Down & Co.



Whitby



Whitby and Maltc
Thirsk . .
Northallerton
Darlington

»>
Stockton



Richmond
'Durham..



Sunderland
Newcastle



Berwick



Thomas Pearson.

Sanders and Sons.

Simpson, Chapman, & Co.

Clarke, Richardson, and Hodgson

Pease & Co.

Scott & Co. . .

Peirse, Consett, & Co. . .

Backhouse & Co.

Richardson and Mowbray

Lumley, Smith, & Co. ..

George and Henry Hutchinson

Smith, Elstob, & Co. . .

Sir John Lawson

William Shields

Benjamin Dunn

Mills, Hopper, & Co.

Russell, Allan, and Wade.

The Old Bank (now Ridley, Cook

son, & Co.)

Exchange (Surtees, Burdon, & Co.)
Tyne (Baker, Hedley, & Co.)
Commercial (Forster, Burrell, Ran-
kin, & Co.) . .
The Bank in Newcastle (R. J.

Lambton & Co.)
Surtees, Burdon, Embleton, & Co.



R. and T. Harrison & Co.



R. and T. Harrison & Co.

Boldero.

Boldero.

Smith, Wright, Gray, & Co.

Dorriens & Co.

R. and T. Harrison & Co.

R. and T. Harrison & Co.

R. and T. Harrison & Co.

Harrison, Ainsley, & Co.

Harrison & Co.

Lefevres, Curries, Yallowby, & Co.

Vers, Glyn, Hallifax, & Co.

and Coutts & Co.
Brown and Collinson.



Newnham, Everett,
mond, & Co.

Masters & Co.
Brown and Collinson.



Drum-



With the exception of the three banks marked with an asterisk, I believe all to
have been banks of issue.

From the statements made in the time of panic in 1793, we learn that the
collective issue of four of the Newcastle Banks, was ;^2 30,000 (an average of
;^57,500 each) ; that the Durham Bank (Mills, Hopper, & Co.), had an issue of



w ^

;^3 1,420; and Messrs. Bell, Woodall, & Co., ^25,000. Besides the four
Newcastle banks mentioned above, there were eighteen issuing banks carrying on
business at this time. If we estimate that they had an average issue of ^25,000
each, which would certainly be within the mark, we reach a total of ^450,000 ;
if we add to this the issue of the four Newcastle banks, which is known to have
been ^230,000, there appears to have been a total of ;^68o,ooo of notes in
circulation.

In Mr. Palgrave's "Notes on Banking" he quotes a remark of Mr. Huskisson
as follows : — ■" Of a paper currency there are two sorts, the one resting upon
confidence, the other on authority." Certainly the three-quarters of a million of
money represented by this paper issue, rested entirely upon confidence. The
subscribed capital of the bankers was insignificant, and we may assume that the
deposits would come under the same term, as the lives of many of the banks were
very short. We see that the Dundee Bank existed for thirty years before its
deposits reached in round figures, the amount of the note issue. The North-country
banks as a body did not exist long enough to prove the truth of Mr. Bagehot's
theory of evolution from bank of issue to bank of deposit. Panic arose — confidence
was broken — all the banks were distressed — many succumbed, but those that did
weather the storm, gained immensely in public opinion. Let me give one instance !
By the successful manner in which Jonathan Backhouse & Co. stood the panic
of 1825, they rose high in public favour, so much so, that for years, in every market
or fair in the county of Durham, a " Jonathan " was infinitely preferred to a note
of the Bank of England. Four only of the banks enumerated now remain as
private banks, namely, Lambton & Co., Newcastle ; Backhouse & Co., Darlington ;
Woodall, Hebden, & Co., Scarborough ; and Roper & Priestman (Sir John Lawson),
of Richmond. The first-named house relinquished its notes in 1840. The authorised
issue of the other firms, taking them in the order named, is — ;^86,2 18 — ^24,8 13 —
;^6,889=/i 17,920 ; their average amount in circulation is ^40,500 — ^9,500 —
^3^500=^53,500; whilst from two of these bankers who now publish balance
sheets we find that Lambton & Co. have current accounts and deposits amounting
to ^3,067,000, and Backhouse & Co. current and deposit accounts of ^2,993,410
— together ;^6,66o,4io against a note issue of under ;^5o,ooo — thus proving
Mr. Bagehot's theory in a remarkable manner. Looking at the banks individually,
we see that a great number perished ere the change from banks of issue to banks
of deposit was accomplished. Could we obtain the particulars of the deposits of
the other banks in the district, so as to show what the total deposits now are,
we should get some idea of the revolution in banking during the century that has
passed since the panic of 1793.



[59]



It is probable that the great increase of country banking, and consequently of
the numbers of notes issued displaced much of the gold currency. The only re-
cord I can give is from the books of Messrs. Backhouse & Co., Darlington, for a
short period from December, 1778, to November, 1779. It is much to be regretted
that no other particulars are available. During the time named they remitted to
London 34,490 Guineas. If other bankers were consigning bullion in the same
way, the influx of gold to the metropolis must have been great.

Particulars of Gold remitted by Messrs. Backhouse & Co., Darhngton, to their
London Agents ; —





Date.


Number of Remittances.


Guineas


1778


11th Month


4




2,400




12th „


.


9




3,010


1779


1st




11




4,500




2nd „




8




8,700




3rd „




6




3,030




4th „




15




5,250




5th „




10




4,200




fth „




5




3,400




7th „




3




1,700




8th „




5




2,700




10th „




2




600



34,490

The money would probably be brought to the markets and fairs of Darhngton
by the country people, and in the course of trade it would be replaced by the



Online LibraryMaberly PhillipsA history of banks, bankers, & banking in Northumberland, Durham, and North Yorkshire, illustrating the commercial development of the north of England, from 1755 to 1894, with numerous portraits, facsimiles of notes, signatures, documents, &c → online text (page 8 of 57)